The Pursuit of Innovation
The Japanese display industry has been challenged by competition from overseas, the elimination or downgrading of previously successful product categories such as plasma TVs and video cameras, and an uncertain national economy. Both the public and private sectors are betting on the power of innovation to help the display industry and the rest of the Japanese consumer-electronics industry rise to the top once more.
by Jenny Donelan
EVEN as U.S. companies have lost consumer-electronics market share to other countries in recent years, they have been able to console themselves with the thought that, “Well, at least we’re the innovative ones.” However, the country that gave birth to Google, Facebook, and the iPhone has now been surpassed in terms of innovation, at least according to the list of 2014 Top 100 Global Innovators recently announced by Reuters. The country that is now home to the largest number of innovative companies in the world is Japan.1
According to the report: “Despite years of economic stagnation, Japan is still the world’s third largest economy with a predominantly high-tech output of inventions. Expenditure on R&D as a proportion of GDP, having dipped in 2010, has returned in recent times to historical levels of approximately 3.4%. Compared to the U.S. (2.7%) and Europe (2.0%), there is a significantly higher level of investment in innovation, as is reflected in the higher presence of Japanese companies in the Top 100 listing this year.”2
Although it should be noted that the winning companies were named based on their R&D investment rather than for particular products, that level of investment is significant. And of those winning companies, the ones with display-related products or services include Asahi Glass, Denso, Fujitsu, Hitachi, Kyocera, Mitsubishi, NEC, Nitto Denko, Panasonic, Ricoh, Seiko Epson, SEL, Sharp, Sony, and Toshiba. So it is encouraging to see that Japanese industry, with a strong background in a display industry that has been faltering of late, is putting R&D money behind-display-related companies.
A Tumultuous History
Before discussing the display industry in Japan, it is instructive to back up a bit and look at the nation’s industry as a whole. Few countries have an industrial history as storied as Japan’s. This small island country (about the size of California) has enjoyed the world’s second-largest economy throughout much of the Cold War era and beyond. Although some of that success was due to post-war assistance from the U.S., the major factor has been the country’s unique economic policy, which ensured close cooperation among government bodies, manufacturers, banks, unions, etc.3
Beginning in the 1950s, the Japanese industry embarked on a long journey to quality, as industrialists began to experiment with the statistical quality concepts of American theorist Dr. Edwards Deming and other management consultants. Interestingly, Japanese companies took these theories much farther than their American counterparts, to great success so that some years later, American companies began traveling to Japan to review operations at companies like Toyota.
Beginning with the bursting of a bubble economy in 1991, Japan experienced a profound and lasting economic slump that it is still struggling to emerge from. The 1990s are sometimes referred to as “the lost decade,” but the 2000s were only marginally better. As this article went to press, the country had just re-elected Prime Minister Shinzo Abe, suggesting national approval of his last 2 years’ efforts to revive the economy. While the current low value of the yen has attracted many tourists to Japan and in some ways invigorated the economy, big changes would appear to be afoot following Abe’s re-election. His plan to reinflate the economy after 20 years of deflation (referred to as “Abenomics”) is actually more popular with economists than the Japanese public, according to
a recent article in the Financial Times.4 But some experts are predicting boom times ahead for Japan, especially now that Abe will be in office until 2018, giving him a good stretch of time in which to execute his plan.
Despite its recent struggles, Japan is still the third-largest economy in the world,5 the third-largest automobile manufacturer in the world,6 and the third-largest shipbuilding nation.7 As recently as 3 years ago, it was the largest consumer-electronics maker in the world.8 Though it still ranks high, there is no doubt that in recent years Japanese consumer electronics has taken a hit from China and South Korea, which have surpassed it both in terms of flat-panel and smartphone production. In addition, products such as video cameras and still cameras, former mainstays of the Japanese consumer-electronics industry, have become less popular, partly because their functions have been taken on by cell phones. Even Japan’s once-invincible gaming industry is considered to be in decline – a far cry from the 1980s and 1990s when Nintendo and Sega dominated in terms of both games and devices.
The Business of Displays in Japan
Obviously, the success and failure of any consumer-electronics business is closely related to displays. Japan has a proud history in both display research and commercialization, with countless Japanese scientists contributing to developments in CRTs, LCDs, and OLEDs. Last year, for example, Sharp researcher (and former Hitach researcher) Katsumi Kondo won SID’s Karl Ferdinand Braun prize for contributions to in-plane switching for TFT-LCDs. Both Sony (with its groundbreaking Trinitron CRT television) and Panasonic have long been synonymous with high-quality televisions and audio-visual equipment. Both companies are currently fighting it out in terms of 4K market share, and also with regard to the new “high-resolution audio” format. And it cannot be forgotten that Pioneer and Panasonic were at the top of the flat-panel plasma market until plasma lost out to less-expensive more-pervasive LCD flat panels.
These LCD-based flat-panel TVs, as previously mentioned, became a major source of competition from both Korea and China. According to Kazuhiko Kubota, manager of marketing communications for display company Japan Display, Inc. (JDI), “Display companies in Korea and China scaled up after the products became easier to mass-produce. Large-sized LCD production in China is one example. This does affect display operations in Japan.”
How the Japanese display industry has chosen to respond is by concentrating on small-to-middle–sized high-resolution LCDs. Says Paul Semenza, display-industry consultant and former president of DisplaySearch, “In general, Japanese suppliers are focusing on high-end products. JDI is using LTPS, IPS, and in-cell touch to address high-resolution smartphones and is moving into tablet PC panels; Panasonic is somewhat of a niche supplier. While Japan has a very small share of the large-panel market (less than 10%), Sharp and JDI are number three and number four in the small-to-medium–sized market.”
JDI itself is the result of a 2012 merger of Sony, Toshiba, and Hitachi’s LCD divisions (financed by the Innovation Network Corporation of Japan, about
which more later) that was created to pursue this very market. Kubota says his company’s focus is on high-value advanced LCD applications for the mobile, automotive, and commercial and industrial display markets in particular.
Other Japanese display companies involved in the small-to-mid–range area are Sharp, Semiconductor Energy Laboratory (SEL), and Advanced Film Device, which together developed a 13-in. OLED screen with 8K resolution that was shown at last year’s Display Week (Fig. 1). The display has 7680 × 4320 pixels, with a density of 664 pixels per inch (ppi).
Fig. 1: Sharp, SEL, and Advanced Film Device collaborated to create an impressive high-resolution 13-in. OLED panel that was shown at Display Week 2014. Source: OLED-display.net.
Sharp is an example of a Japanese company that is clearly pursuing innovation. Both Sharp and SEL won a 2013 Display of the Year Gold Award from SID for joint development of an indium gallium zinc oxide (IGZO) display with both high resolution and ultra-low power consumption. Although researchers around the world had pursued IGZO as a backplane material for some time, Sharp was ahead of the curve in finding commercial success with it. Its IGZO technology was first used in its Aquos smartphone. In 2013, Apple released a version of the iPad Air that was IGZO based. Although not officially confirmed (as is the case with Apple’s suppliers), this IGZO is assumed to be Sharp’s. According to Semenza, Sharp is using oxide TFTs on its Gen 8 line to address larger higher-resolution tablet PC markets. In addition, it is using its Gen 10 line to make large (70-, 80-, and 90-in.) LCD TV panels.
In June of 2014, Sharp announced what it calls its Free-Form Display, which can be configured in a variety of shapes, such as circles and ovals. These displays are based on IGZO technology and proprietary circuit design methods that enable gate-driver functions to be dispersed throughout the pixels on the display area, rather than the perimeter. This functionality is clearly aimed at the dashboards of cars, among other applications.9
According to a recent article in the Financial Times, Sharp says that it too has shifted some of its focus to the smaller- and medium-sized displays used in smartphones and tablets and hopes to increase sales for displays used in vehicles. The Japanese manufacturer also says it is trying to avoid making the same mistakes with car screens as it did with TV displays. Some experts have said that Japanese TV manufacturers lost touch with consumers as they became obsessed with improving picture quality, while Asian rivals offered less-expensive sets with display performance that was lower but good enough to satisfy viewers.10
Last summer, Sony and Panasonic teamed up with JDI to create a new company to design medium-sized OLED panels. The company, JOLED, was also financed by the Innovation Network Corporation of Japan (INCJ). The venture will integrate Sony and Panasonic’s OLED R&D functions with JDI’s wide portfolio of display technologies. The company is expected to go live in January 2015.11
Another company that has been investing time and money in OLEDs, though in the area of lighting, is Konica Minolta. At Display Week 2014, the company presented what it claims is the world’s most-efficient OLED panel, with an emitting area of 15 cm2, a lifetime of 55,000 hours (LT50) at a brightness of 1000 cd/m2, and a CRI of 81.12 The color temperature is 2857K. Konica Minolta has also started roll-to-roll manufacturing of flexible OLED panels using a plastic barrier film. This is currently the world’s largest manufacturing line (Gen 5 equivalent) for OLED lighting.13
Even as consumers are learning about 4K resolution, work is being done at the R&D level on 8K resolution. Japanese public broadcaster Nippon Hoso Kyokai (NHK) has been a proponent of 8K content for some time. (See the article by NHK, “Super Hi-Vision as Next-Generation Television and Its Video Parameters” in the November/December 2012 issue.) NHK held public 8K viewings in Brazil and Japan of World Cup soccer matches last year. This knowledge of 8K from a major Japanese content provider could prove some useful synergies with Japanese display makers in the future.
Investing in Innovation
The Innovation Network Corporation of Japan (INCJ), having been instrumental in the formation of two new display companies, could well play a key role in the
display industry’s future. It also represents the kind of wide-scale long-range government involvement in the country’s industry as a whole (similar to post-World War II) that is a key differentiating factor for the Japanese industry. According to the INCJ website, the organization was designed to “provide financial, technological, and management support in order to promote the creation of next-generation businesses through ‘open innovation,’ or the flow of technology and expertise beyond the boundaries of existing organizational structures. The organization is now actively reviewing various investment opportunities in
areas of green energy, electronics, IT, and biotechnology to infrastructure-related sectors such as water supply.”14
Clearly, Japanese companies, and not just the government, are aiming at innovation for redemption. When asked about the role of the Japanese display industry on a global level, JDI’s Kubota responded: “The role of Japan’s display industry is to lead in innovating technologies for display panels, related materials, parts, and production facilities.” And, certainly, Japan’s display history is rich in innovation, with Japanese companies pioneering the first mass-produced laptops (Toshiba) and LCD screens (Sharp).8
Just where that innovation will lead is the question. Perhaps a hint of what’s ahead could be found in the innovation awards at the most recent CEATEC JAPAN. CEATEC is Japan’s largest consumer electronics show. The CEATEC Innovation Awards are made by U.S. journalists. According to the awards website, “This year’s CEATEC JAPAN was quite different than its predecessors. In prior years, the show was dominated by consumer-electronics products. Vendors competed to unveil the largest screens. While television and 8K technology was present at the show, this years’ conference was dominated by displays for components, Big Data applications, and robotic technology.”15 Chief among this year’s display winners was Toshiba Glass, a simpler lighter Google Glass rival. The Grand Prix winner was not a display but a table-tennis robot that functions as an actual opponent.
As for rumors of its demise as an economic superpower, they are premature. Japan continues to do quite well. Japan’s display industry itself has several factors in its favor. One is the country’s overall history of consumer-electronics excellence. Another is the willingness of different industry entities to join together in a common cause and the willingness of government to support those efforts. The formation of JDI, for example, was not a reactive cost-cutting measure, but a proactive measure designed to meet the competition.
Last, it should not be overlooked that Japan is the land of outrageous fashion trends and inventions. The JapanTrends.com website has an entire department dedicated to product innovations, which range from socks that resemble sushi to paper masks that read and display with symbols the kind of mood the wearer is in. It is easy to poke fun at some of these inventions, but out of such playfulness does innovation come. It’s impossible to say whether the next disruptive display device will come from Japan, but with imagination, the willingness to adjust and cooperate, and a government willing to provide the resources, it just might happen.